Seven Semiconductor Firms Set To Be Bought Out

Semiconductor M&A: Five Reasons the Trend Will Continue

As I mentioned a couple of weeks ago, the tech sector saw a record level of M&A activity in May.

But the frenzy isn’t over yet.

FBR & Co. analyst, Christopher Rolland, reveals, “At the pace of consolidation set thus far this year, 32% of all U.S. publicly traded semiconductor companies would be acquired in 2015.”

And Broadcom (BRCMCEO, Scott McGregor, says, “About six months ago, I said that in five to 10 years, half of the companies we know today won’t exist anymore. And it’s pretty solid on that track.”

I actually appeared alongside Rolland on CNBC’s Closing Bell recently to discuss the merger mania. But there’s never enough time on air to share all my research.

So let’s dig into all the reasons why the stage is set for even more M&A in the semiconductor industry.

I’ll also share a shortlist of seven companies that are most likely to be acquired next. At substantial premiums, no less…

What’s Driving the Urge to Merge?

In business, deal-making always begets more deal-making. Why?

Because when two companies combine forces, there’s no way for other companies in the industry to stay competitive in terms of market share, product offerings, etc.

Catching up via organic growth or in-house innovation simply isn’t an option. It takes too long. So they’re forced to find a suitable partner, too.

We’ve seen proof of this in the chip industry recently. For example, when Avago Technologies (AVGO) scooped up Broadcom for $37 billion, it compelled Intel (INTC) to get off its duff to finally consummate the long-rumored deal for Altera (ALTR).

But the current M&A frenzy isn’t just about momentum. In this case, there are more specific and powerful forces at work…

Chip Consolidation Driver #1: Customers Crave Systems, Not Parts

We can all attest that our mobile gadgets (smartphones and tablets), keep getting more complex.

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Disclosure: None.

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